Movie Gallery to shut 520 stores

Movie Gallery Inc., a video store chain burdened by more than $1 billion of debt, said Tuesday that it would close 12% of its stores to conserve cash.

About 520 unprofitable locations will be shut, Movie Gallery said. The company declined to say how many jobs would be eliminated. It has about 40,000 full- and part-time workers in its 4,500 U.S. and Canadian stores.

The move will save an unspecified amount of money as the video chain works to appease debt holders. The retailer, which also operates Hollywood Video stores, said this month that one bondholder agreed to a default waiver until Sunday. Another set of lenders extended a waiver agreement in August.

The Dothan, Ala.-based retailer has struggled with debt since buying Hollywood Entertainment for $1.01 billion in 2005.